Goldman Agrees to Advise Ukraine for Free, Government Says

Goldman Sachs Group Inc. (GS), which
hasn’t arranged a debt or equity sale in Ukraine since at least
1999, will advise the government of the former Soviet republic
free of charge.

The bank, led by Chief Executive Officer Lloyd Blankfein,
will advise the administration of Prime Minister Mykola Azarov
on managing its investments, state debt and “other issues of
financial-policy implementation,” the government said in a
statement dated June 20 and published on its website today.

The selection follows Goldman’s third attempt in 17 years
to crack the neighboring Russian market where it has been
ramping up presence and wooing the Kremlin for roles in asset
sales. The bank, once the most profitable securities firm in
Wall Street history, wasn’t involved in a single deal since 1999
as the Ukrainian government and companies raised $41.4 billion
in stock and debt sales during the period, Bloomberg data show.

Monika Schaller, a Goldman spokeswoman in Frankfurt, didn’t
immediately respond to two telephone calls and a written request
seeking comment.

Second Bailout

Ukraine’s government, which in July obtained a $15.6
billion loan from the International Monetary Fund for its second
bailout in two years, expects its debt servicing payments to
peak between 2012 and 2016. The nation resumed Eurobond sales in
2010 after a three-year break and has sold $2.75 billion of debt
so far this year. The government may issue as much as $4.5
billion in bonds in 2011, according to the budget plan.

Ukraine has also twice extended a $2 billion six-month loan
from VTB Group, Russia’s second-largest bank, which it received
last year.

The IMF has so far released $3.4 billion in two tranches,
helping the government cover its deficit and boost foreign-currency reserves. The third disbursement, initially planned for
March, has been delayed after the authorities failed to raise
the retirement age and increase household utility prices.

Ukraine may receive $3 billion from the IMF in September,
Deputy Prime Minister Serhiy Tigipko said June 22.

The government will have to repay 153.3 billion hryvnia
($19.2 billion) between 2012 and 2016, the Finance Ministry said
Dec. 28. Ukraine’s state debt, including guarantees, more than
tripled since the beginning of 2008, surging to $57.8 billion as
of May 31, according to the ministry.

In Russia, by contrast, Goldman jumped to fourth place in
handling equity sales for Russian companies last year, its
highest position ever, behind VTB Capital and Renaissance
Capital, both based in Moscow, and Morgan Stanley. (MS)

Goldman, the fifth-largest U.S. bank by assets, was one of
the four banks chosen by Russia’s central bank June 14 to manage
a sale of part of its stake in OAO Sberbank, a transaction that
may be worth as much as $7 billion. It also helped sell 300
million pounds ($480 million) of sterling-denominated bonds
issued by OAO Russian Railways June 15 and assisted with Russian
search engine owner Yandex NV (YNDX)’s $1.3 billion initial public
offering in May.